Casa em Caixa's business plan: low cost housing in Lisbon

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CASA EM CAIXA’S BUSINESS PLAN – LOW COST HOUSING

IN LISBON

Pedro Fialho Caupers de Bragança

Master of Science in Business and Administration

Supervisor:

Professor Doctor Eduardo Correia, Assistant Professor, ISCTE Business School, Department of Marketing, Operations and General Management

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CASA EM CAIXA’S BUSINESS PLAN – LOW COST HOUSING IN LISBON

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Resumo

Actualmente, o posicionamento das cidades é determinante para o seu desenvolvimento e crescimento económico. Com isto em mente, e à semelhança de outros exemplos europeus e mundiais, é proposto que Lisboa altere a percepção que transmite ao mundo de cidade apenas dedicada ao turismo para uma cidade dinâmica que gera inovação e desenvolvimento

económico.

Este estudo tem como base a oferta de uma solução de habitação low cost que potencie este desenvolvimento ao oferecer condições apelativas com o objectivo de atrair e reter talento na cidade de Lisboa.

Após alguma pesquisa, concluiu-se que é possível criar habitação low cost no coração de Lisboa através da utilização de materiais reciclados e formando um acordo com um privado para arrendamento de um terreno livre.

Relativamente ao material de construção, este plano negócios propõe a utilização de

contentores de carga. Estão disponíveis em grande número, são fáceis de manobrar e bastante acessíveis, este tipo de construção já foi realizada com sucesso em larga escala em Londres e Amesterdão.

Como a solução é um produto low cost, foi proposta uma forma adicional de angariar receita: utilizar a fachada do edifício como painel publicitário. Esta solução oferece ao projecto um bom período de retorno e oferece elevada rentabilidade num negócio low cost, tornando-o muito apelativo para investimento. O montante total necessário para iniciar o negócio é cerca de 1 005 000 !.

Palavras Chave: Plano de negócios; Casas contentores de carga; Habitação low cost; Habitação reciclada.

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Abstract

In the present day, a city’s positioning is determinant for its development and economic growth. Bearing this in mind, and to the resemblance of other European and worldwide examples, it is proposed that Lisbon shifts its perception to the world of a city only dedicated to tourism to a dynamic city that generates innovation and economic development.

This study is based on a low cost housing solution that empowers this development by creating appealing conditions with the ultimate goal of luring and retaining talent in the city of Lisbon.

After some research, it was concluded that low cost housing could be developed in the heart of Lisbon through the use of recycled materials and entering in an agreement with a private party to rent free land.

As for the construction material, this business plan proposes the use of shipping containers. Available in large numbers, easy to manoeuvre and very affordable, this type of construction has already been successfully used in a large scale in London and in Amsterdam.

Since the solution is a low cost product, another form of raising revenue was proposed: to use the facade of the building as an advertising panel. This solution provides the project with a good payback period and offers high profitability on a low cost business, turning it to a very attractive investment. The total amount needed to start up the business is 1 005 000 !. Keywords: Business Plan; Shipping container homes; Low cost habitation; Recycled habitation.

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Acknowledgements

This thesis represents the end of another academic stage of my life. I strongly believe that the difficulties and obstacles I had to overcome would have seemed impossible to cross if not with the support I knew was always there for me.

Firstly, I would like to thank Professor Doctor Eduardo Correia for the constant availability and different points of view whenever a dead end seemed to be ahead.

Also, to my family, especially to my grandmother, my mother and father, my sister and my aunt, whom without none of this would have been possible, an enormous thank you.

A deep acknowledgement to my friends and colleagues, for the motivation and encouragement they gave me was inspirational.

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Figure Index

Figure 1 - Puma City, Outside ... 26

Figure 2 - Puma City, Inside ... 27

Figure 3 - Container City, London ... 27

Figure 4 - Container Learn, London ... 28

Figure 5 - Dimension of the Potential Market in Volume ... 34

Figure 6 - Dimension of the Pontential Market in Value ... 34

Figure 7 – Satellite view of the properties ... 44

Figure 8 - PDM Classification ... 44

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Table Index

Table 1 – Age Group ... 30

Table 2 – Gender of target audience ... 30

Table 3 - Currently, you live... ... 31

Table 4 - Would you consider finding another place? ... 31

Table 5 - Why not? ... 32

Table 6 - If you had the choice, where would you move to? (adapted from table 20 in the annexes) ... 32

Table 7 - Sort, according to your preference, the points you value the most when choosing a place to live ... 33

Table 8 - Suppose that an offer of a T0 or a T1 comes up in lisbon with 28 sq meters, in a central area close to public transportation. What do you think it would be the fair value to pay for each these options (without expenses)? ... 33

Table 9 - SWOT ... 40

Table 10 - Staff Payroll ... 47

Table 11 - Other Staff Costs ... 48

Table 12 - Positioning among competitors ... 49

Table 13 - T0 & T1 Prices (in Euro/per sq meter) ... 51

Table 14 - Provisional Balance Sheet ... 56

Table 15 - Estimated Income Statement ... 57

Table 16 - Sales + Service Providing ... 58

Table 17 - SES - Supplies and External Services ... 59

Table 18 - Financing ... 60

Table 19 - Project / Company Evaluation ... 61

Table 20 - Detailed cost of the construction ... 62

Table 21 - Cost of basic equipment ... 62

Table 22 - Room Renting & Advertising sales ratio ... 64

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Table 24 - Room Renting & Advertising sales ratio ... 65

Table 25 – Financial Indicators ... 66

Table 26 - Current Liquidity (prices in 425!) ... 67

Table 27 - Where do you live ... 77

Table 28 - Where do you work/study? ... 78

Table 29 - If you had the choice, where would you move to? ... 79

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Sumário Executivo

Este plano de negócios tem como objectivo a criação de uma empresa que ofereça habitação

low cost próxima do centro de Lisboa. Existe cada vez mais abertura ao conceito low cost à

medida que o país mergulha cada vez mais na crise financeira que assola a Europa e o mundo. Se por um lado o consumidor está à procura de poupar o máximo possível, este conceito tem vindo a registar cada vez mais aceitação em vários modelos de negócio como a aviação ou turismo. Desta forma, é possível responder aos jovens que desejam sair mais cedo de casa dos pais sem que no entanto consigam suportar as soluções existentes ou, então, não sentem que as suas necessidades sejam respondidas com a oferta actual.

É importante realçar que o edifício proposto seria destinado apenas para arrendamento e não para venda de apartamentos. O mercado de arrendamento está subdesenvolvido devido à tradição Portuguesa de comprar uma casa ao sair de casa dos pais. A facilidade de acesso ao crédito apenas alimentou esta prática que se tornou cada vez mais enraizada com o passar dos anos.

Consequentemente, o mercado imobiliário tornou-se deficitário ao ser desenvolvido com o intuito de venda e não de arrendamento. Os inquilinos mais antigos são protegidos por leis de arrendamento que impedem os senhorios de aumentar os preços, mesmo que isso implicasse nivelá-los com os preços de mercado. E o que acontece, na maioria dos casos, é que o preço de mercado é demasiado elevado para o que o imóvel oferece.

De forma a apurar a realidade do mercado actual, foi conduzido um estudo de mercado junto do público-alvo da solução proposta.

Os participantes no questionário que serviu de exemplo para o estudo mercado demonstraram que existe procura considerável por arrendamento de apartamentos em Lisboa e, mesmo as pessoas que já vivem sozinhas ou que partilham casa, continuam à procura de melhores propostas. Deste modo, o mercado toma uma forma bastante dinâmica dando-lhe elevada rotação, ainda que as alterações de preços no mercado não se sintam tão rapidamente como no mercado de grande consumo.

De forma a manter os custos de construção do edifício ao nível mais baixo possível, este plano de negócios propõe a utilização de contentores de carga como material de construção.

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13 O facto de o país se encontrar em crise significa que há mais dificuldade em aceder ao crédito e que existe menos disponibilidade para investimentos de grande valor. Assim, terrenos desocupados tenderão a permanecer desocupados. Este plano de negócios oferece uma forma de rentabilizar um activo estagnado.

O conceito do negocio assenta num espírito simples e prático, na medida em que os clientes darão valor à possibilidade de estarem próximos da experiência ‘Lisboa’ residindo numa habitação amiga do ambiente. O facto da ideia ser pioneira em Portugal é, sem dúvida

nenhuma, um factor crítico de sucesso. A localização proposta para a construção do edifício é na esquina da Avenida 24 de Julho e a Rua Boqueirão, um local próximo da vida nocturna da cidade e de vários tipos de transportes públicos.

Como mencionado, o objectivo é utilizar contentores de carga como material de construção em que cada contentor seria um apartamento com 28 metros quadrados. Tipicamente, as pessoas que vivem em espaços relativamente pequenos e perto do centro da cidade, são

jovens e práticos – geralmente estudantes e jovens profissionais, o público-alvo deste plano de negócios.

A pesquisa mostrou que a principal preocupação deste público é o preço, e, além disso, a aparência exterior está perto de ser completamente irrelevante na escolha de habitação, podendo-se, por isso, assumir que a aceitação dos contentores de carga seria generalizada. Não obstante, a utilização de contentores de carga em construção é um sucesso internacional, tendo sido utilizados para a construção de casas, escritórios, residências para estudantes, estúdios de música, e outros propósitos, em cidades como Londres e Amesterdão.

A proposta de valor da empresa Casa em Caixa é oferecer habitação com mais conforto por um preço mais acessível, no coração de Lisboa.

De forma a garantir a sustentabilidade do negócio, foi considerada outra fonte de receitas, colocação de publicidade nas fachadas do edifício. Esta medida, permite que o negócio seja rentável numa perspectiva de curto prazo e, a médio/longo prazo, abre oportunidades de investimento noutros mercados.

O montante necessário para avançar com o empreendimento é de 1 005 000 !, com um retorno de 6 anos, ou até 4 anos dependendo dos preços praticados por apartamento.

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1. Introduction

Today, more than ever, the world’s dynamics are overwhelming. People can have meetings in different continents in the same day and, with the fast paced development of

telecommunications, the need to travel is quickly decreasing. The impact of this dynamics in the business world has been severely felt and companies face the challenge to be more competitive than ever, trying to add value through price reduction or brand experience whilst competing with companies that can be a national rival or a multinational with worldwide presence.

This competition has also seen its way to cities. It is no longer acceptable that a city takes a passive role on the changes the world is suffering because, without relevance, it will simply fall in to oblivion. Historically, harbour cities that provided a good environment for trading goods, quickly grew surpassing their own outskirts in order to respond to the needs of its residents. Nowadays, some cities are classified as financial centres of a country or as the cradle of innovation in information technologies, and the economical growth felt in the surrounding areas is quite relevant, resulting in better quality of life for its habitants. If Lisbon does not take a stand in this matter it will be discarding a huge potential to gain relevance in today’s world, and in the future, delving to a downward spiral of incapacity to respond to the challenges the XXI century has brought upon cities worldwide. The natural characteristics the region offers are incredibly attractive, as it is possible to enjoy the beach and the countryside just a few minutes away from Lisbon. Along with cultural heritage and the sightseeing possibilities, the city is undoubtedly a fabulous tourist destination.

Nevertheless, the city has more than just tourism to provide – it offers a good set of conditions for people to actually live in Lisbon. It is in these good conditions that investments must be made in order to increase the city’s competitiveness and role in the economy.

Portugal is a country of entrepreneurs and innovators, from the discovering campaigns across oceans to inventing the first pre-paid business model in cell-phones or a mechanism that allows digital payment in highways, those are only examples of the innovation culture that this country has shown over time which must be explored, and conditions for it to flourish must be developed.

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15 The success of the city at an international level is reflected in the thousands of visitors it receives every year and, every year, more foreigners chose Lisbon to live, work and enjoy the good weather and culture. This happened without that much effort, as it is possible to observe that the city is already luring talent, so the challenge resides in retaining this talent.

It is costly to live within the city centre and the outskirts do not offer a good price-quality relation, and, even though the mentality of Portuguese is changing in their housing habits – people wish to move out their parent’s earlier – they cannot afford to do so.

This project offers a low cost habitation solution for a city in need to draw and retain young talent in order to develop and create economic growth, a solution directed to the segment that can have a major impact in the city’s development, young professionals and students. Without much buying power, they are very demanding and represent opportunities for several

businesses.

Offering the means to live in the city is a key – or the key – success factor for the turnaround that Lisbon needs in order to reappear in the maps of relevant cities in the world.

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2. Literature Review

2.1 Entrepreneurship & Business Plans

Prior to delving into the development of this document, some research as been conducted in order to understand the purpose of the business plan and who writes it.

Beginning with what is the business plan, it is a document prepared by the entrepreneur describing the external context of the new venture and the internal dimensions that have to be aligned for the venture to succeed – marketing, finance, human resources and manufacturing Hisrich, Peters (2002). Out of this, it becomes obvious the need to conduct both an external as an internal analysis involving the new venture. And when conducting the internal analysis, it is necessary to do it from a transversal point of view, combining the multidisciplinary subjects of management aiming towards a common objective.

Yet a concept has been introduced, one that needs further exploitation, the Entrepreneur. Who/what is an entrepreneur?

According to Merriam-Webster, an encyclopaedia Britannica company, the word entrepreneur has the following Etymology: French, from Old French, from “entreprendre” to undertake. An entrepreneur is One who organizes, manages and assumes the risks of a business or

enterprise (Britannica, 2011).

Kao (1989) describes the entrepreneur as a catalyst, someone who conceives something new and ensures its implementation. Not only this person generated the idea, but also acts as a human vehicle, overcoming obstacles in the way and making things happen. So, the entrepreneur is the one facing the difficulties to implement the new idea but is also the one who came up with the idea in the first place.

Timmons (1977 in Kao et al 2002) states entrepreneurship (…) is initiating, doing, achieving,

and building an enterprise or organization, rather than just watching, analysing or describing one. It is the knack for sensing an opportunity where others see chaos, contradiction and confusion…. Revealing two key characteristics of the entrepreneur:

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motives to walk away.

Kao, Stevenson (1984, in Kao 1989) said that entrepreneurship is the attempt to create value by recognizing a business opportunity, managing the risk of taking on this opportunity as well as the necessary skills to bring the project to fruition. The entrepreneur is the person that finds funding for the project and recruits the necessary talents to develop the project.

So, entrepreneurship is to undertake a set of actions in order to achieve a pre-determined goal – usually related to creating value through the materialization of a business opportunity. The one that carries on the established set of activities is called an entrepreneur.

The function of the entrepreneur is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological method of producing a new commodity or producing an old one in a new way, opening a new source of supply of materials or a new outlet for products, by organizing a new industry. (Schumpeter, 1952, in

Hisrich, Peters, 2002). Implicating that an entrepreneur does not have to necessarily start a new business, it might just implement a new way of doing some part of the established process, whether production, R&D or anything else. Therefore, contesting the pre-established idea that entrepreneurs are people that own their own businesses. No, entrepreneurs also work for companies, they have a set of qualities that allows them to distinguish themselves of the “general population” of a company. One may have entrepreurial characteristics and still work for someone else, improving established processes.

To conclude, for the entrepreneur to succeed in its efforts to implement a modification, the structure of business and society must be affected by this change creating an impact in the economical development, as a consequence, growth and increased output are generated, translating in more wealth. (Hisrich, Peters, 2002).

Having shed some light on the meanings of entrepreneur and entrepreneurship, it is now possible to understand what is the business plan and what is its use.

Kaplan and Warren (2007) define a business plan as a 25 – to 40 – page written document

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who is involved with the venture, why its product(s) or service(s) are needed in the market place, and what it will take to accomplish the business aims.

When referring to the business plan, Hisrich and Peters (2002) added it also addresses both

short-term and long-term decision making for the first three years of operation. Thus, the business plan – or, as it is sometimes referred to, the game plan or road map – answers the questions Where am I now? Where am I going? How will I get there? Potential investors, suppliers, and even customers will request or require a business plan.

So, in brief, the business plan is a short document that clarifies on what to do to accomplish pre-determined milestones on the way to implement a new venture. However, what is its end purpose and who are the stakeholders that may ask for the business plan?

The business plan acts as a blueprint for building a company. It describes the course the company is taking and what will have to be done in order to stay in route. It is a means to and end, several actually as it opens doors to: determine the business viability, raise capital, project sales and cash flows, detail to employees their roles as well as company expectations, improve and assess the company’s performance and plan for a new product/service. (Hisrich, Peters 2002).

However, the single most important reason for preparing a business plan is to secure capital. Investors agree that an effectively prepared business plan is a requisite for obtaining funding for any business, whether it is a new business seeking start-up capital or an existing business seeking financing for expansion (Kaplan in Kaplan, Warren (2007)).

There is now doubt of the importance of this document when raising capital to start a business. Nevertheless, its importance in everyday operations must not be neglected as it is easy for someone starting a business to micromanage and forget about long-term objectives, the business plan must be used as a tool to combine long-term with short-term objectives. The business plan must be viewed as a game plan, not just as a tool for raising capital and lure talent.

As Sahlman in Kaplan, Warren (2007) says, entrepreneurs can also use a business plan to

establish goals and document milestones along the business’s path to success. Entrepreneurs often find that it is difficult for them to look objectively at the business’s day-to-day

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performance. A business plan provides an objective basis for determining whether the business is viable and can meet established goals and objectives.

But the business plan is not for the entrepreneur alone, it is obvious that investors will require the document as well but there are other stakeholders to take into account.

The business plan may be read by employees, investors, bankers, venture capitalists, suppliers, customers, advisors, and consultants Hisrich, Peters (2007). So, there is a wide

range of people that can be interested in reading a company’s business plan. And all of the interested parties, can influence the actual content and focus, as they are decisive in the course of action the company is to take. Therefore, the entrepreneur must be prepared to address to all of these stakeholders’ issues and concerns, covering as much key information as possible. So it is a document that must be prepared for several target audiences. Thus, it must respond to as much questions and doubts that any of these stakeholders may have in order to make it as clear as it is for the entrepreneur. It always best to assume that the person reading the document knows nothing of the subject, and by reading it the entrepreneur’s knowledge and enthusiasm should be passed on. A good business plan needs to speak for itself. (Kao, et al., 2002).

Most of the times, this type of document must be short and direct. Its main objective is not to gain attention but to gain a business partner, an investor, a supplier or a client.

It is a “I came, I saw, I conquer” type of philosophy, and it is very unlikely for the person who wrote it to get another chance at impressing the one reading it, time is money. And now, all of what the entrepreneur is about to demonstrate has to sell by itself. It must succeed the first time around.

The purpose of this business plan is to conduct a financial and conceptual analysis of a service in a business area that has been suffering a lot due to the crisis, and, eventually, to pick up the interest of potential investors in order to create the needed conditions to create and develop the company Casa em Caixa with the proposed business model.

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2.2 Positioning Lisbon

Globalization has ‘forced’ cities to embellish themselves to public eyes, since it has become easier than ever to live in Paris or in New York, competition among cities has increased. If it is not of the city’s policy to make an effort to offer good quality of life and employment conditions, their inhabitants will depart for other places in search of better opportunities. The phenomenon we are witnessing nowadays is that competition has spread from the

corporate world to cities, and this is not only regarding tourism. Naturally, this is the business of many cities worldwide, however, if a city wishes to be involved in the creative and

dynamic world of today’s businesses, it has to offer a lot more than just good sights and culture.

According to Matias (1997), territorial competitiveness is the capability of a certain territory to attract, keep and reorder investments considered to be structuring of economical activity. Meaning that for a city to grow economically, it has to provide with the conditions to attract investment and labour.

Successful cities seemed to have some things in common – visionary individuals, creative organizations and a political culture sharing a clarity of purpose Landry (2000). This

statement leads to the following reasoning: for a city to be successful, the key success factor is the people that live there.

So, how to lure and retain talent to a city in order to place it in the map of cities that promote economical growth?

Lisbon has several characteristics that make it a great place to visit, uncountable cultural ‘must sees’, great weather, very close to the beach and countryside, nightlife for all tastes, traditional pastry and cuisine, music and warming people.

Conversely, this will not help the city to create economical growth more than it already does; it needs more, more people and more businesses. Landry (2000) described a creative milieu as a place – a cluster of buildings, a whole city or a region – containing both ‘hard’ and ‘soft’ infrastructure to breed flow of ideas and inventions. This ‘creative milieu’ has high

concentration of entrepreneurs, intellectuals, social activists, artists, administrators or students with an open mind in a cosmopolitan context and this mixture results in a twirling of

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consequently, economical growth. The ‘hard’ infrastructures are the buildings, research institutes, universities, cultural facilities, transport services, and the ‘soft’ infrastructures are the social networks and the system of associative structures that boost human interactions and act as a microclimate for economic success.

The most relevant traits in the characterization of the dominant cities undergo through strong investments in physical infrastructures and in human capital in order to increase productivity Jaret (1986, in Matias 1997).

Barcelona, for an example, was a highly industrialized city that was able to climb out of a dark destiny. It has developed its harbour to become one of the most important, if not the most, in dealing to containers and merchandise in southern Europe. It has also taken advantage of its cultural heritage, weather and ‘hard’ infrastructures – it held the summer Olympics in 1992 and Cultural Universal Forum in 2004 – to promote tourism all year round, being a fabulous destination in the summer for tourists all over the world, and, in the winter, providing an excellent place to hold summits or congresses for the corporate world.

N. Leon (2008, in Mann, Chan (2011)) describes Barcelona as a city transforming itself from an old industrial area into a flagship innovative city zone with a mix of work and living arrangements designed to attract an international prestige population, underlining the importance of not only luring the talent to the city but also making an effort to keep it there, requiring sophisticated city governance that caters to the needs of the newcomers and links their personal and economical lives.

Lisbon has some of the necessary infrastructures to attract and retain qualified labour, both national and international. There are great universities with a wide variety of areas of investigation, R&D institutes (The Champalimaud Foundation opened one in 2011 by the river Tejo – Champalimaud Centre for the Unknown) and corporate clusters such as Lagoas Park or Tagus Park. As for the international potential, every year, more students come to Lisbon under exchange programs and, every year, more decide to stay in the city studying or even working.

Now, it is necessary to provide the remaining ‘hard’ infrastructures in order do draw and retain the much needed ‘soft’ infrastructures that compose an innovative and dynamic city.

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3. Reference Framework

As seen, the business plan is a key tool to develop the business, whether in its start up phase – to present to potential investors and partners – or in a further stage – working as a guideline, providing information of where the company is going and the actions that will occur in order to comply with the stipulated objectives. Meaning that the business plan is as important in the take off as it is in any other point of the company’s lifetime.

When writing a business plan, two different analysis must be conducted: External and Internal. The business plan must contain key information for both an expert – the innovative idea and numbers that support it, for an investor or a potential business partner – and someone that knows absolutely nothing on the subject – all the surrounding context that explains why it makes sense to invest in such product/service, competition, market research, marketing

strategy and description of the business venture.

The external analysis should contemplate the following: ! Market Research;

! Changes in Construction; ! The opportunity;

! PESTEL Analysis; ! Success factors.

After the external analysis, an internal analysis should be conducted, one that intersects the points exposed in the external analysis with the key points of the business venture identifying strengths and weaknesses of the company as well as opportunities and threats that the market presents. The SWOT analysis enables the possibility of pinpointing these intersections. Finally, the presentation of the solution to the problem identified is composed by the description of the business venture that includes:

! Mission Statement; ! Product description; ! Location;

! Differentiation factor; ! Competition;

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23 ! Team

! Marketing Strategy; ! Financial Analysis.

By reading the business plan, all questions regarding concept, feasibility, business model, target market, communication strategy or any concern of how to implement the project should be answered.

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4. Market Research

4.1 Rental Market & Impact in Economy

The world’s crisis has brought needed change to many countries and Portugal is no exception. Consequently, markets are adapting responding to countries’ economies and newfound needs. As Oswald (1999) states: economies need to be adaptable. In an ever-changing world,

countries require workers to be able to move around to find new jobs. And what we are

witnessing is a need for Portugal to respond to a crisis that took over the world at the same time as Portugal fought its own crisis.

A key tool for to win this battle is through the rental market, which is poorly developed in Portugal and it is a key point in the development of economies, (…) our continent should

revive private renting and try to make the housing market function more smoothly. We can put Europe back to work (…) by reducing home ownership (Oswald, 1999).

This reality is becoming more obvious and professionals in the real estate business are also of the position that the development of our cities should go through urban

rehabilitation/requalification associated to an increment of the rental market opposing the acquiring option at any cost. This way, it will be possible to contain the territorial expansion of urban areas, promote the proximity between people and activities and minimize the infrastructure costs, since these already exist in urban centres, as there is more functional mobility of the populations (Araújo, 2010)

Meaning that solving the rental market problem will have an impact not only on the

development of a market segment that has been put aside for decades but also help solve other problems such congestion of public transports and accesses to the city during rush hour periods. Ultimately, this will have an impact in the environmental footprint of the city by reducing the number of vehicles entering the city, reducing traffic within the city limits and providing better quality of life to people that live in the city centre.

4.2 Changes in Construction

The effects of this crisis are being severely felt in the construction business as the

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25 are starting to leave the country to find better opportunities 1. This migration phenomenon is happening not only with professionals but also with companies that are looking for work outside our borders 2. The big opportunity here – in Portugal – lays in the rehabilitation of existing buildings rather the construction of more buildings, as mentioned by Araújo (2010). On top of all this, the construction market, in a global view, has been changing for sometime trying to respond to a ever more demanding customer that is more aware of the perils of pollution and requires its products to be greener – especially with the great ease of information access.

These changes can be in a small scale, like replacing regular light bulbs with low energy consumption light bulbs that have a longer life expectancy and leave a smaller ecological footprint, the instalment of solar panels is also becoming more popular and other, more drastic measures, are also being put into practice like installing rain water recovery systems to feed irrigation or even green roof tops – also known as “living roofs”. These green roof tops consist in covering part or the whole roof top of a building with vegetation over a waterproofing membrane with several purposes such as: absorbing rainwater, providing insulation, creating a habitat for wildlife and helping to lower the urban air temperatures. Pushing the limit a little bit further on recycling and alternative materials being used in construction, other materials are being considered like shipping containers. This is a type of material that is widely available meaning that its acquisition in second hand is cheap – it is often cheaper for companies to buy new ones that to pay for the transport back to the factories – and provides high flexibility in designing and assembling the structure.

Governmental measures place our country under pressure, exercising a strong influence in the Portuguese real estate market. Tenants, owners, promoters and investors will be more demanding and wary than ever, looking for more and more attractive and competitive

conditions forcing the several market segments to create no approach strategies (Puig, 2010).

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4.3 The Opportunity

Reflecting on the current real estate market, most people with some buying power – even some who do not – already have a home due to the Portuguese consumer tradition, much similar to the Spanish referred by Oswald (1999). So, if a solution of rental market was to be developed, it should aim at a market that is being slightly neglected, the younger professionals and even students that wish to rent a place that offers them comfort for a fair price near the city.

Research was conducted bearing that target in mind and a type of construction was identified which would make possible to offer habitation at a lower price – construction with shipping containers.

Although construction goes against what was presented by Araújo (2010), it was the best way found to develop low cost habitation, since in order to rehabilitate or requalify a building, one must first own or buy a building, this would likely result in higher costs, thus making low cost rental impossible.

The concept already exists in other European cities, such as London, with the Container City project, Scotland, Cove Park, and in Amsterdam, with the biggest container city project in the world called Keetwonen. Having multiple applications, such as housing, offices, recording studios, stores, temporary homes for refugees or natural disaster victims, etc. Its applications are as many as one can imagine.

Puma City – Puma’s mobile concept store

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When we first heard about Puma City, the tri-level, 11,000-square-foot retail store and event space made of 24 refurbished shipping containers, we were intrigued by the popular

sportswear brand’s pre-fab initiative. The portable Puma Store, which was designed by our favorite shipping container architects LOT-EK, makes clever re-use of discarded shipping containers and has been traveling around the world as a spokes-structure for both Puma and prefabricated buildings. (Yoneda, 2009)

Figure 2 - Puma City, Inside

Container City

Figure 3 - Container City, London

Containers are an extremely flexible method of construction, being both modular in shape, extremely strong structurally and readily available. Container Cities offer an alternative solution to traditional space provision. They are ideal for office and workspace, live-work and key-worker housing.

Container Cities do not even have to look like containers! It is a relatively simple matter to completely clad a building externally in a huge variety of materials.

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To date this alternative method of construction has successfully created youth centres, classrooms, office space, artists studios, live / work space, a nursery and retail space

(Container City, 2011).

Container City I is a project that dates from 2001, it took 4 days to install a total of 20 containers, turning to 15 units live/work studio space.

Figure 4 - Container Learn, London

Figure 4 is of a project to provide additional classroom space for the expanding Tower Hamlets College in London.

Keetwonen

Figure 6 - Keetwonen in construction, Amsterdam

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Figure 7 - Keetwonen, air view

Keetwonen is the name of the biggest container city in the world.

Living in a converted shipping container was a new concept in the Netherlands (…) it turned out to be a big success among students in Amsterdam and it is now the second most popular student dormitory offered by the student housing corporation "De Key" (www.dekey.nl) in Amsterdam (and they have many). The initial fears of some people that the container homes would be too small, too noisy, too cold or too hot, all turned out to be unfounded: : they

turned out to be spacious, quiet and well insulated and certainly offer value for money,

compared to other student homes in the city. (Tempohousing, 2011)

Sanlitun North

These pictures only come to show the immense potential and possibilities of using ISO shipping containers. Limitations regarding design are, practically, all in the mind of the designer, and its capabilities has a construction material able to provide with basic comfort have already been proven in several occasions in different

countries with different climates.

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4.4 Market study

A market study was conducted in order to estimate some values concerning the market size and its value as well as the trends in the intended target market.

There were 153 participants in the study, with 91% (139 participants) belonging to the target market – ages between 18 and 30 years old – out of these, 54% were male and 64% were female as showed in the following graphics.

The market study was conducted with Portuguese citizens, therefore, the questionnaire was assembled in this language. Their participation was asked using online social networks.

Table 1 – Age Group

# Answer Response % 1 0 0% 2 18 - 24 96 63% 3 25 - 30 43 28% 4 31-35 1 1% 5 36- 41 5 3% 6 > 42 8 5% Total 153 100%

Table 2 – Gender of target audience

# Answer Response %

1 Masculino 75 54%

2 Feminino 64 46%

Total 139 100%

Most of the respondents, live in the great Lisbon area – about 77% – in particular in Lisbon (40%), Cascais (29%) and Oeiras (13%).

But, more importantly, it was possible to infer through the questionnaire that 73% of the inquiries work/study in Lisbon.

Currently, 60% of the sample representing the target market lives in its own home, leaving 40% already renting a room or a home, which is a very significant proportion. Taking into

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31 account the age of the audience, the “own home” option refers to their parent’s and not the individual home itself. The next graphic shows this question in more detail.

Table 3 - Currently, you live...

# Answer Response %

1 Casa própria 81 60%

2 Casa alugada 13 10%

3 Casa própria com amigo(s) ₄ _3%

4 Casa alugada com amigo(s) que já

conhecia 15 11%

5

Quarto alugado - partilha a casa com pessoas que não conhecia e que também alugam quartos na mesma casa

8 6%

6 Casa alugada - sozinho ₈ _6%

7 Estúdio (T0 com kitchenette) 2 1%

8 Outro: 4 3%

Total 135 100%

Table 4 - Would you consider finding another place?

# Answer Response %

1 Sim, estou de momento à procura. 18 14%

2

Sim, mas dependia do que

encontrasse, não estou com pressa de

sair do sítio onde estou. 90 68%

3 Não 25 19%

Total 133 100%

From table 4, it is possible to conclude that the great majority of the respondents – 81% – would be willing to, at least, keep on looking for better a better option of renting. Out of these, 18% are already looking for something else. Yet, 68% of the inquiries are willing to see what else is out there even though they are not in a rush to leave the place they are currently living in. From this is possible to conclude that the market is highly volatile and people aren´t loyal to a “brand” but loyal to their own needs and to the tenant that provides with the better response to those needs.

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32 From those that are not looking for another place to live, the strongest motive is they’re happy with the current situation. A quarter of these, state that they cannot move out because they cannot afford to rent a room/apartment. A small percentage – 8% - already searched the market but could not find anything with a good price/quality relation.

Table 5 - Why not?

# Answer Response %

1 Estou satisfeito com a casa onde _estou 16 67%

2 Não tenho dinheiro para alugar um

quarto/casa 6 25%

3 Já procurei e não encontro nada com

boa relação preço/qualidade 2 8%

4 Outro 0 0%

Total 24 100%

Out of the people that are currently looking for another place to live, 61% would like to go to Lisbon and 28% to Cascais, these two options being the ones with more expression.

The following table shows the preferred destinations of the people that are currently looking for another place to live. This question enables to understand that Lisbon is the favourite destination, with 61% of the inquiries saying they would like to move there.

Table 6 - If you had the choice, where would you move to? (adapted from table 20 in the annexes)

# Answer Response %

5 Cascais 5 28%

6 Lisboa 11 61%

11 Odivelas 1 6%

19 Fora da Grande Lisboa 1 6%

Total 18 100%

Table 7 illustrates the importance people give to certain characteristics of a home. It is to highlight that the price is consistently the most relevant detail when home-hunting, as

opposed to the outside appearance which was placed in last for almost half of the respondents. Proximity to the place of work/study is also, at least, in the first three positions of 85 of the respondents, meaning that it also carries considerable weight in the decision.

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33 So, out of the table it is fair to conclude that price is the main concern, proximity to place of work/study the next one, accesses near the place, total area of the place and surrounding neighbourhood in third, fourth position and fifth position, and finally, decoration and exterior appearance in sixth and seventh, respectively.

Table 7 - Sort, according to your preference, the points you value the most when choosing a place to live

# Answer 1 2 3 4 5 6 7 Responses 1 Preço 66 30 9 11 2 1 1 120 2 Proximidade com local de trabalho/estudo 26 37 22 11 11 8 5 120 3 Área total 3 15 19 24 39 14 6 120 4 Decoração 0 2 8 9 14 49 38 120 5 Aspecto _exterior 0 2 4 8 21 28 57 120 6 Área _envolvente 19 16 26 22 21 11 5 120 7 Acessos 6 18 32 35 12 9 8 120 Total 120 120 120 120 120 120 120 -

To gain sensibility to the prices that people expect from a place in Lisbon, this question was presented. It became quite clear that there is a significant difference between a T0 and T1, nonetheless, expectations of a relatively low price were shown in both cases, although expenses were not included.

Table 8 - Suppose that an offer of a T0 or a T1 comes up in lisbon with 28 sq meters, in a central area close to public transportation. What do you think it would be the fair value to pay for each these options (without expenses)?

# Question T0 T1 Responses Mean

1 200 ! - 250 ! 43 10 53 1.19 2 250 ! - 300 ! 41 33 74 1.45 3 300 ! - 350 ! 22 34 56 1.61 4 350 ! - 400 ! 14 30 44 1.68 5 400 ! - 450 ! 6 23 29 1.79 6 > 450 ! 1 15 16 1.94

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4.5 Market size & Profitability

Measuring the potential market of the renting market showed to be quite difficult. In order to get these numbers, the results from the market study were extrapolated to the population of the Great Lisbon Area that works or studies in another municipality – meaning that the age groups considered are between 15 and 64 years old – summing up to the total of 1 141 747 people.

Figure 5 - Dimension of the Potential Market in Volume

Figure 6 - Dimension of the Pontential Market in Value

To calculate the value of the potential market, the following thinking was applied: Interested (Customers) * Price (375!) *12 (assuming a contract of 12 months).

0 500 000 1 000 000

1 500 000 1 141 747 1 037 273

880 563

Potential Reach Relevant Target Audience Interested 3 500 000 000 4 000 000 000 4 500 000 000 5 000 000 000 4 667 730 382 3 962 533 706 Potential Market (Relevant Target) Explicit Market (Interested)

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35 Fitting these values to reality would require reducing these numbers as INE’s sample3

contemplates a wide range of population. Taking into account that the Portuguese population is aging there are fewer younger people than old, and there is also the age interval between 15 and 17 to be removed. Therefore, considering only 25% of these values would be a very safe approach to the calculations, leaving 220 141 people potentially interested in the service, corresponding to ! 990 633 427 in value.

4.6 PESTEL ANALYSIS

4.6.1 Political, Legal and Economical Context

The economical crisis landed in Portugal causing severe damages. A third-party entity was asked to intervene upon the request of a newly elected government. The International

Monetary Fund agreed to provide external help to the Portuguese economy and, in June 2011, about 78 billion Euros were assigned to the Portuguese rescue package.

However, Portugal’s situation is not only due to the international circumstances but also to a national crisis very much reflected in the real estate market. Properties were overpriced causing a bubble in the market that popped and left consumers hands-on with high debts, trying to repay their loans based on climbing interest rates.

Thus, banks relentlessly affected by an international crisis in the financial markets and also with the domestic situation, had to restrict access to credit causing a serious impact in the real estate sector. This would end up affecting not only consumers but companies as well since clients cannot pay their suppliers and if, a while back, credit could be used to keep the

business going, now it is a lot more complicated due to the growing difficulty in its access. So if banks refuse credit and clients don´t pay on time there’s a cash flow interruption that takes businesses into bankruptcy. And if there is no money to invest nor to pay current suppliers, the growth of the real estate market slows down, and market prices are re-adjusted as less people are looking to buy and more need to sell.

In order to respond properly to the challenges that are arising, the state was obliged to cut on public expenditures, reviewing and terminating unnecessary public offices and cutting down

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36 investment in public works focusing mainly on the maintenance of the ones that were already under way.

The legal aspect of the rental market in Portugal has also placed some obstacles to its development as the law itself factiously favours tenants, providing them with protection against strong increases in prices leaving the landlords with very low rents for decades in properties that are very well located. Despite the pressure to review this law, the process is taking long and only few changes have been made so far.

The rent law is too protective of the current tenants limiting the landlords’ power to increase the rent level to the fair price of the estate. Along with the migration to the outskirts of Lisbon from its residents, older tenants and companies were left with lifelong contracts that crippled this market and made it very unattractive to investors, as opposed to the construction in the surrounding areas of the city that witnessed great demand.

The easiness of credit access in the years that foresaw the crisis motivated Portuguese to buy homes and the home ownership rate in Portugal quickly grew.

In just a few decades the rental market was restrained by these events and became less and less popular. The low expression of the rental market would even end up to restrict the Portuguese economy due to the dislocation factor as people tend to search for jobs that allow them to remain close to their estates.

As more and more people moved away to the nearby areas of Lisbon (most likely in pursuit of bigger homes and more tranquillity) these areas became dormitories for the city workers, as for the city itself, it got crowded during the day and emptier and emptier at night as the years went by.

Eventually this created difficulties that the country now has to surpass as an economy's

'natural rate' of unemployment depends on the ease with which its citizens can move around to find jobs. Fluid societies have efficient economies (Oswald 1999). It is possible to find a

relation between the home ownership rate of a country and its unemployment rate thus it is not so hard to understand that Portugal is an example of how this can go wrong. The reviewing of the rental law is crucial to reactivate the economy, creating opportunities for businesses and entrepreneurs.

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37 Considering the current economical situation, it is expected that the rental market will gain more importance creating a needed dynamic in the sector and aiding to speed up the economical recovery. The real estate market is a good barometer to the state of a country’s economy and it is sensed that the Portuguese market is on the verge of a big change and the country needs to revert its current situation.

In order to create the needed dynamics to the market, the government will review the rental law until the end of 2011 and plans to balance the obligations between landlord and tenant. Also, the bureaucracy around the temporary re-allocation of residents of buildings in rehabilitation will be simplified in order to endorse the renewal of buildings that have been neglected for a long time due to the complications that arose from a flawed and out of date rental law. This will allow the landlords to re-set the prices at a fairer value, although not the ‘fair’ ones.

Additionally, and as mentioned, reviving the rental market in the city centre will also help revitalize the economical environment of the city because better living conditions will be created, thus attracting and retaining more labour.

As competitiveness among cities grows, it is part of public policy to promote investment in infrastructures that can offer conditions to receive people for the most varied purposes. Hosting Expo 98 provided Lisbon with more conditions to develop regular tourism – with the building of Oceanário de lisboa – and corporate tourism – with Feira International de Lisboa (FIL). As far as corporate tourism goes, the city has been betting heavily in this segment with several other solutions such as Centro de Congressos de Lisboa, Centro Cultural de Belém (also a tourist hot spot) or Centro de Congressos do Estoril.

Slowly, conditions are being built to lure more people to the city instigating economic growth which, in turn, and if the right public policies are applied, with generate better quality of life for the city’s habitants.

4.6.2 Social Context

A social result from the low rents is that landlords don’t see the need of taking care of their properties since they receive petty rents. Inherently, Lisbon is beginning to fall apart and

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38 aging ever faster because there seems to be no point in investing on the rehabilitation of the existing buildings.

As for young people who wish to leave their parents home’s and move to the city, they have three options: a) either they have someone in the family with a rental contract for a long time and take advantage of the low rents they pay; b) they rent a small room in the city centre; c) they rent a flat in the outskirts of the city since renting a flat in the city centre just for one person is usually too expensive.

The migration process that occurred from the city centre to the peripheral areas is also due to the better transports and infrastructures that allow the population to make their commute. With these conditions, people prefer to raise their children in a quieter environment taking advantage of the natural landscape of the neighbour regions of the city. Most of the people that were left living in Lisbon are older people. There have been some attempts to reverse this process and bring back younger people to live and re-populate the city but the market’s conditions are not attractive enough.

Also, with the economical crisis and the growing opportunities outside the country, we are witnessing the largest emigration wave since the 1950’s and 1960´s. The favourite

destinations are the old colonies, Angola and Brazil, although more and more the destination is losing relevance as the country’s economical situation retreats by day. Programs like the Erasmus Program and Inov Contact are also opening the mind of the younger Portuguese population that has been actively participating in these initiatives realizing that working abroad is a common reality in the current days and should not be put aside in a professional career.

4.6.3 Environmental Context

There is a growing concern with the environment that people and companies are taking ever more seriously. As consumers get more informed and understand that they have a saying in the products they buy, entire industries are being forced to adapt and to change their business models so they can keep competitive advantages and respond to their clients’ “newly” found needs and demands, surviving in a more and more dynamic market.

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39 Recycling has been accepted and people and companies are starting to understand the

importance of re-utilizing resources and do so whenever possible.

In construction this concern has also taken place and new solutions are being developed adding value not only to the final costumer but also to everyone else since all of us benefit from lower pollution levels. Consequently, with a pre-disposition to recycling and the need to respond to the market demands, it is easier to gain acceptance from to the public to new construction materials.

4.6.4 Technological Context

Using shipping containers for construction purposes has been done for quite some time now, it started as military barracks, then temporary residence and offices in construction sites and recently this type of material has been used to erect building complexes for numerous purposes – classrooms, residential, music studios, youth centres, community centres. The technology necessary has been around for years but the usage of shipping containers simply never stuck, until a few years back.

The know-how needed to build the foundations and insulate the shipping containers is well developed at a international level. Portugal, with its strong tradition in civil engineering, should have no problems in keeping up.

4.7 Success Factors

To prevail in the real estate market there are three key factors to consider: location, location,

location. This is the criterion that determines the success of the property, whether selling or

renting.

When looking for a home, especially a rented home, the client seeks to satisfy a need, quality of life. If subject A is renting a home and wishes to be as close as possible to the most

important activities in its life, whether work, entertainment or leisure, it will be willing to pay more for the proximity. Thus, if it subject A looking for a flat near its place of work and the beach at the same time, he will be willing to pay more than for another flat relatively close to work and further away from the beach. Even though it means a smaller place.

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40 On the supply side, if one wishes to rent real estate, it shall not face very strong competition due to two factors:

a) In most situations, people renting a home or a room usually do it as a secondary source of income, meaning that the amount of time they have to spend on the activity is very low. A steady income and low preoccupations is all they want;

b) It is a business that operates in the medium/long run so fast price changes are very difficult to implement. And even if they were possible, that would increase the competitiveness of the market and result in loss of profits for the landlords – bearing in mind that the latter only wish for another steady source of income.

This sort of “numbs” the market and results in slow price fluctuations, only accelerated if the real estate sector suffers from the economic situation.

However, the concept that will be presented adds another criteria to the real estate motto

location, location, location: price. Because the investment is relatively low it is possible to

add the price factor to the equation, offering a service already existing in the market for a much lower price. Naturally, it still is real estate and location continues to be in the heart of the success of the venture, but the price will be the crucial differentiating factor of the proposal.

5. SWOT Analysis

Table 9 - SWOT

Internal

Strengths

• Pioneer project in Lisbon and Portugal • Low cost business model

• Concept • Location

• Multi-product business

Weaknesses • Financial Support

• Lack of experience in the renting business

External

Opportunities

• Economical need to boost the rental market • Migration to Lisbon in pursuit of jobs and

college education

• Crisis motivates changes in consuming behavior

Threats

• Public perception of construction material • Business model easily replicable

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5.1 Strengths

The novelty of the project ads the surprise factor to the business, thus generating an important buzz among the public contributing to successful yet inexpensive communication. Its low cost business model represents an excellent response to both the current economical climate and the growing existence of low cost businesses meeting the needs of a more practical generation that seeks simplicity and fights for a more sustainable world. The proposed location is

excellent, and that is the three key points to succeed in the real estate business. Finally, the possibility of including advertising on the exterior facades leaves room to lower rents and still have a profitable business and satisfy the customers’ needs for low cost habitation.

5.2 Weaknesses

Starting a new business venture alone always carries a big risk and if no financial partners are gathered, the project may be at risk due to possible complications that might appear and to the economical climate. Along with that, the Manager has no experience of whatsoever in the renting business and small and basic mistakes may occur that jeopardise the business venture.

5.3 Opportunities

As mentioned, the rental market is an excellent barometer of a countries economy, and Portugal needs to reshape its economy giving room to rental business to flourish along with the incentives that the current government is creating to boost the market. In one hand, the desertification of the interior of the country continues – whether looking for jobs that require specialized labour or to pursuit college education – and on the other, Lisbon is growing as a destination for many foreigners that wish to change lifestyle and this constitutes an

opportunity as more people are looking for a place to live in the city. Finally the economical crisis causes changes in the consuming behaviour leaving room for low cost options to grow as people try to save money wherever and whenever possible.

5.4 Threats

The construction material might not be well perceived by the public as it seems to be just a shed, therefore something that cannot offer the comfort one expects when renting a home. Also, the concept is very simple to replicate and if other players, with stronger financial

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42 resources come into play, they can offer lower prices due to their leveraging power in other businesses and in economies of scale.

5.5 Points of Action

Considering the analysis above, a set of measures are purposed in order to reduce the chances, or even avoid, the identified Weaknesses and Threats:

a) Weaknesses:

1. As for the financial support, there are several organizations in Portugal that create conditions to meet with potential investors reducing risk for the entrepreneur – whether trough competitions or through the organization of meetings that promote the exchange of information between participants – such as Acredita Portugal, ANJE (Associação Nacional de Jovens

Empresários) or FNABA (Federação Nacional de Business Angels). 2. One can only get experience by doing, however, at least for the first year it

would make sense to hire consulting services in order to create a business frame to follow this way minimizing complications that may arise. Another possibility would be to bring in someone with knowledge in the market in a permanent way.

b) Threats:

1. The best way to avoid people from getting the wrong idea of the construction material is through education. By educating the audience that this material can provide with the comfort people expect from a home it may reduce their questions and doubts about the material. The best way to do this would be to make available a “model flat” that potential customers could visit to verify for themselves the veracity of what is being sold. Another vehicle to inform a larger number of people would be through the use of media, offering someone known to the target public the possibility of living in a model flat for a

determined period and using social networks and a blog to share the

experience. This would create a buzz around the product and increase curiosity on the subject.

2. It is very hard to avoid replication of any business, and this one in specific doesn´t even have a patent to use as protection. However, being the first is a

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43 strong weapon and if done right, it can help in fighting potential competition, and if not through better prices than with the experience and quality

arguments.

6. The Proposed Solution

6.1 Description of Venture

This service arises as an answer to the problem of re-positioning Lisbon as a city of the XXI century. The business model consists in renting each container as an individual apartment. There would be no apartments for sale.

6.1.1 Mission statement

The mission of “Casa em Caixa” is to provide with low cost habitation near city centres.

6.1.2 Product Description

The product consists in offering low cost habitation of the T0 typology using shipping containers as construction material.

6.1.3 Location

Unsurprisingly, the location of the building is key to attain more attention from the clients, by being closer to the city centre, and to increase the profitability of the building as an

advertising space, the more exposed the building the higher the price to ask for.

The location of the building would be two lots situated on the corner of Avenida 24 de Julho with Rua Boqueirão with the numbers 49 and 74.

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Figure 7 – Satellite view of the properties

Both these are privately held and are classified as “Área de Estruturação Urbanística Mista”, meaning that these lands are destined to habitation and tertiary uses – services sector – as it is possible to determine by the following image from the interactive PDM available in the Lisbon’s City Hall website4.

Figure 8 - PDM Classification

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45 In order to build on the sites, Casa em Caixa would have to enter in an agreement with the owner, a rental agreement. The flexibility of the construction material opens doors to quickly assembling or disassembling the whole structure. As such, if the landlord wishes to terminate the contract, there would be little costs involved in removing containers.

6.1.4 Differentiation factor

Since the material used in the construction is cheaper than conventional construction and it allows for shorter building periods, the costs are drastically reduced. Thus, it is possible to offer lower prices to costumers, often less than half that what the market is asking for an apartment of the same typology (T0).

Nonetheless, the quality of the home is not affected by the construction material, meaning the final consumer will get more comfort – as it will get more personal space – for a lower price. Finally, the use of shipping containers opens doors to creative architecture, meaning that the structure can blend into the city as well as bring added value to the venture. The use of its facades as advertising panels could provide with alternative sources of income. And, due to the high flexibility the shipping containers provide, this can be achieved without

compromising the privacy of the residents by designing the building in order to expose as much surface as possible maintaining the privacy of its residents.

6.1.5 Competition

Since the service provided is the rental of apartments, the competition that Casa em Caixa is facing is all the players in this market. Due to the difficulty in naming everyone individually, it will be assumed the renting real estate market as a whole.

The private renting market offers some level of comfort at relatively high cost, as tenants have two choices, either pay for the whole house/apartment – and that means having the possibility to do so – or just pay for a room and share bathroom, kitchen and living room with other flat mates. In most situations, people end up choosing the second option since it is cheaper. Although there is some supply, the conditions aren´t that good, and often people end up trading off something for another, whether comfort to be closer to the city, or distance from Lisbon to gain in the quality of the flat.